Transfer pricing

3 How MAP - 3.5. Interaction between taxpayers and competent authorities - 3.5.2.


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3 How MAP works

3.5. Interaction between competent authorities

3.5.2. Mediation

Process related assistance such as the use of a mediator or facilitator could help provide a perspective on the discussions, identify process hindrances, and in some cases bring more of a problem solving focus to the discussions.  Neutrality and impartiality on the part of the mediator/facilitator is crucial to a successful outcome.

A mediator’s role may offer an opportunity for the competent authorities to view a specific case, or the MAP process itself, from a much different perspective.  This perspective, perhaps acquired through the mediator’s restatement of the positions or of the critical issues, may illuminate elements of a case or of the MAP process that are not perceptible when viewed from the standpoint of an administration defending an adjustment or one that is being asked to provide relief.  In this regard, mediation may assist in resolving some of the more systemic issues of a MAP relationship. 

The primary responsibilities of a mediator are the clear identification and reinforcement of the goals of the MAP proceedings, clarification of facts, objectively restating positions, and ultimately seeking opportunities for resolution.  In addition, the mediator’s ability to disengage parties from a classic dispute pattern, typical of a zero sum game, and shift the focus to a more collegial and collaborative approach to resolving the issues at hand will facilitate the competent authorities in reaching a satisfactory result.

As with most case specific taxation issues, the use of any independent third party in the MAP process would of course require that all stakeholders are in agreement on the terms and conditions of their participation and that they adhered to the relevant confidentiality provisions.

Best Practice Nº16:   Bilateral process improvements

Some competent authorities have devoted considerable time to bilateral and multilateral deliberations on both process and on substantive treaty issues, which has proven to advance the MAP process.  Specific process improvements have been produced by way of published MAP guidance ranging from specific process timelines to establishing broad objectives or mandates.  (See, e.g., 25th October 2000 Administrative Arrangements agreed between U.S. and U.K. competent authorities, as well as PATA Guidelines).  The benefit of this guidance is that it reaffirms what is sometimes intuitive to experienced personnel and then memorialises the outcome via agreement and publication.  The result is a legacy agreement or understanding that will encourage its continued application.

Where treaty partners have significant caseload, bilateral memoranda of understanding have been successful in enhancing consistency and providing a roadmap for continued improvements.  Bilateral training where competent authorities have taken the exact same training courses or have carried out joint sessions has been successful.  Maintaining these process improvement initiatives over an extended period of time would likely continue to serve the MAP process well. 


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